CUB Working to Minimize Rate Impact of New Avista Rate Increase Request

Avista Utilities has requested approval from state regulators to raise customer rates in Oregon. Avista is a natural gas utility that serves parts of Southern and Eastern Oregon, including Roseburg, Medford, Klamath Falls, and La Grande. Under Avista’s proposal, its Oregon natural gas customers (numbering about 104,900) would see a rate increase of $3,774,000 or 3.1 percent. However, CUB and other stakeholders have identified some costs that can be cut to reduce the impact on customer bills.

According to Avista, a combination of capital additions and increasing general business expenses require it to seek a rate increase. This is not surprising: natural gas utilities like Avista must continue to upgrade or replace existing natural gas pipes that have reached the end of their useful lives. Natural gas utilities are also investing in new pipes to serve customers in areas where demand is increasing.

However, natural gas is a fossil fuel and climate change regulations will force reductions in natural gas usage. CUB believes that gas utility investments should be limited to those that are clearly needed for safety and reliability.

Avista is also seeking recovery of increased labor and operations costs needed to operate its system.

Another change Avista has proposed is in how federal tax benefits are handled. Federal law contains several corporate tax breaks for regulated utilities with varying requirements. In this case, Avista is seeking a change to the way that tax benefits are passed through to its customers. It is a complex issue that has the potential to completely eliminate the price impact of this rate request. CUB is working diligently to ensure that Avista’s customers receive the benefits they deserve.

Beyond the portions of the case that still must be reviewed and may be adjusted in the future, CUB and other parties were able to settle some issues. Avista agreed not to request an increase in the profit margin its shareholders earn, which is currently set at 9.4 percent. CUB has worked hard in recent general rate cases to ensure that Oregon utilities keep their profit margins from increasing. This is especially important while customers continue to feel the effects of economic recession and rising inflation rates. CUB thanks Avista and the other parties in this case for working together to resolve this issue in a way that does not harm customers.

It is shaping up to be another busy regulatory season for CUB staff but, as always, we are up to the challenge. At least four Oregon utilities are currently engaged in general rate cases, or will be in the next month. We’ll continue doing our part to work hard and advocate for customers’ interests in all the proceedings.

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